Productivity CommissionAnnual Report Series

Annual Report 2012-13

Commonwealth of Australia 2013

ISSN 1035-5243 ISBN 978-1-74037-453-8

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An appropriate citation for this paper is:

Productivity Commission 2013, Annual Report 2012-13, Annual Report Series, Productivity Commission, Canberra.

JEL code: D

The Productivity Commission

The Productivity Commission is the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians. Its role, expressed most simply, is to help governments make better policies, in the long term interest of the Australian community.

The Commission’s independence is underpinned by an Act of Parliament. Its processes and outputs are open to public scrutiny and are driven by concern for the wellbeing of the community as a whole.

Further information on the Productivity Commission can be obtained from the Commission’s website (www.pc.gov.au) or by contacting Media and Publications on (03) 9653 2244 or email: maps@pc.gov.au

Chairman and Commissioners

Peter Harris (Chairman) Philip Weickhardt, Gary Banks (former Chairman) & Patricia Scott

Alison McClelland & Robert Fitzgerald* Mike Woods (Deputy Chairman) & Wendy Craik

Angela MacRae, Warren Mundy & Jonathan Coppel

*:Currently on leave from the Commission

Absent: Siobhan McKenna

Acknowledgments

The Commission wishes to thank its staff for their continued efforts, commitment and support during the past year.

FOREWORD vii

Foreword

This is my first Annual Report as Chair of the Productivity Commission. One of the more significant events for the Commission in the last twelve months was the retirement of Gary Banks, our inaugural Chair. Gary had a major influence on the wide acceptance today of the Commission’s role as independent adviser on national reform. On behalf of Commissioners and staff, I wish him well.

On coming to the Commission, I have found a highly competent and committed group of people, who are justifiably proud of the Commission’s contribution to national reform. Equally, transitions of this kind create an opportunity for a re-examination of what organisations do and how they do it, especially in times of significant budget restraint.

Accordingly, we are undertaking a number of internal reforms to ensure we can continue to provide high quality advice within a reducing resource base. There will be a need to take a more flexible approach and potentially to broaden our range of report products. Nevertheless, consultation and exposure draft processes so critical to the quality of our outputs will remain central to our work.

We are also improving our ability to communicate in a world where social media is increasingly important. We now use Twitter to inform a wider audience about the availability of our reports. We will also move increasingly toward online reporting as the primary focus and consequently will use this opportunity to improve the information and search functions so important to effective online delivery. Initial changes will be implemented in our Reports on Government Services.

Our research program will focus more closely on flagship pieces, which help to outline future directions for reform. Our first effort in this area will look at over-the-horizon policy options that may be consistent with demographic change.

We expect that the Commission’s program of work is likely to expand as the momentum for productivity enhancing reform increases. With a slowing of national income growth as the terms of trade declines, productivity growth becomes, again, the paramount source of sustainable growth.

The Commission looks forward to contributing to a strong national reform agenda.

Peter Harris Chair

CONTENTS ix

Contents

Foreword vii

Abbreviations xii

CHAPTERS

1 Using administrative data to achieve better policy outcomes 1

Effective policy making rests on evidence 1

Administrative data are sources of evidence 3

What could be done with greater access to data? 5

Why isn’t more happening? 10

Australia — limited progress from sporadic starts 13

A sustained and concerted effort is needed 14

2 Review of Commission activities and performance 17

Overview 18

Year in review 19

Transparency and public consultation 24

Feedback on the Commission’s work 28

Policy and wider impacts 28

Associated reporting 35

APPENDICES

A Management and accountability 39

B Program performance 65

C Competitive neutrality complaints 121

D Government commissioned projects 123

E Supporting research and related activities 145

F Publications 157

G Financial statements 161

x CONTENTS

Attachments

A1 Commissioner and employee statistics 57

A2 Agency Resource Statement — 2012-13 61

A3 Fraud control certificate 62 A4 Compliance Index 63

References 211

Index 233

Boxes

1.2 Techniques to protect confidentiality 11

2.1 Participative and transparent processes 25

2.2 Respect for Commission activities: some recent examples 29

B.1 Performance indicators for the Commission 70

B.2 Longer-term influence 71

B.3 Supporting research and annual reporting publications, 2012-13 115

B.4 Supporting research projects underway at 30 June 2013 116

Figures

2.1 References on hand 19

2.2 Website hits 27

2.3 Mentions of the Commission in Australian parliaments, 2009-10 to 2012-13 34

A.1 Productivity Commission structure and senior staff, 30 June 2013 40

B.1 Productivity Commission main activities 2012-13 66

Tables

1.1 Advantages and disadvantages of using administrative data 5

A.1 Financial and staffing resources summary 42

A.2 Expenditure on consultancies, 2008-09 to 2012-13 53

A1.1 Chair and Commissioners, 30 June 2013 57

A1.2 Part-time Associate Commissioners, 30 June 2013 57

CONTENTS ix

A1.3 Part-time Associate Commissioners completing appointments during 2012-13 58

A1.4 Employees by location and gender, 30 June 2013 58

A1.5 Employees by employment status and gender, 30 June 2013 59

A1.6 Salary ranges, 30 June 2013 59

A1.7 Employees by level and reason for separation, 2012-13 60

B.1 Use of Commission publications in parliamentary committee reports in 2012-13 74

B.2 Parliamentary Library use of Commission publications in 2012-13 77

B.3 Program of public inquiries and other government-commissioned projects 88

B.4 Public inquiry and other commissioned project activity, 2008-09 to 2012-13 89

B.5 Cost of public inquiries and other commissioned projects completed in 2012-13 90

B.6 Direct administrative expenditure on public inquiries and other government-commissioned projects, 2008-09 to 2012-13 90

B.7 Impact of recent Commission inquiry reports on government policy making 96

B.8 Impact of recent Commission inquiry reports on government policy making 98

B.9 Formal competitive neutrality complaints, 2008-09 to 2012-13 112

D.1 Stage of completion of commissioned projects and government responses to Commission reports 124

E.1 Speeches and presentations by the Chair, Commissioners and staff, 2012-13 150

E.2 International delegations and visitors, 2012-13 155

xii ABBREVIATIONS

Abbreviations

ABS Australian Bureau of Statistics ACCC Australian Competition and Consumer Commission ACCI Australian Chamber of Commerce and Industry AGCNCO Australian Government Competitive Neutrality Complaints Office AIHW Australian Institute of Health and Welfare ALGA Australian Local Government Association ANAO Australian National Audit Office ANU Australian National University ANZSIC Australian and New Zealand Standard Industrial Classification ANZSOG Australia and New Zealand School of Government APEC Asia-Pacific Economic Cooperation APRA Australian Prudential Regulation Authority APS Australian Public Service BRCWG Business Regulation and Competition Working Group (COAG) CEDA Committee for Economic Development of Australia COAG Council of Australian Governments CRC COAG Reform Council EFIC Export Finance and Investment Corporation EGWW Electricity, gas, water & waste services GS Gas supply GDP Gross Domestic Product GTAP Global Trade Analysis Project GTEs Government trading enterprises HILDA Household, Income and Labour Dynamics ICTs Information and communication technologies IMF International Monetary Fund LP labour productivity MBS Medicare Benefits scheme

ABBREVIATIONS xiii

MFP multifactor productivity NAPLAN National Assessment Program for Literacy and Numeracy NATSEM National Centre for Social and Economic Modelling NBN National Broadband Network NCP National Competition Policy NRA National Reform Agenda OAIC Office of the Australian Information Commissioner OECD Organisation for Economic Cooperation and Development OHS Occupation health and safety OID Overcoming Indigenous Disadvantage report PBS Pharmaceutical Benefits Scheme PC Productivity Commission RBA Reserve Bank of Australia RCT Randomised Control Trial R&D Research and development ROGS Report on Government Services SES Senior Executive Service SLA Statistical Local Areas TCF Textiles, clothing and footwear WSSD Water supply sewerage & drainage services